Huayi takes hard way into Hollywood
Chinese firms buying Hollywood movie studios is nothing new, but Wang Zhongjun says that would not be his first option in trying to get his media company to grow internationally.
Wang, president of Huayi Brothers Media Corp, said his company will increase its international presence, especially in the United States. But buying big companies overseas is not the best way to do it, he said.
“Just like when Huayi started its film business in China, what we did was to sign many talented film directors and producers, and we hope this model can be used in the US,” he said. “After all these years’ experience in the US, we think it is possible to do that.”
Huayi was founded in 1994 by Wang and his brother Wang Zhonglei. The company’s roots are in movie production, and it has expanded into developing and distributing mobile games and building theme parks in Asia. As a listed company, Huayi’s market value is about $80 billion, equal to about five DreamWorks, Wang Zhongjun said.
Originally Huayi embarked on its international journey by co-financing movies but met with failure.
In 2014 the company changed its approach and directly invested $130 million to establish a wholly owned US subsidiary to produce and distribute movies and TV shows in the US.
Huayi also plans to work with STX Entertainment, a Burbank-based, fully integrated film and TV company, to jointly invest in and co-produce 18 films to be distributed worldwide by 2018. This will be the first time that a Chinese company has participated in all activities in the value chain, from production to marketing and distribution.
The deal would also help Huayi promote its brand globally and obtain access to the Hollywood film industry.
“I think it’s an important strategy for Huayi in Hollywood to look for good directors and producers, and use the Chinese market’s capital strengths,” Wang Zhongjun said.
“In the future, we would like to have a controlling stake and to develop Huayi into a very good studio with our own products, our own production lines, and distribution channels overseas.”
In its quest to develop a better internationalization strategy, Huayi held a forum on the topic in Beijing recently, inviting industry insiders for insights.
“Huayi is still new at working with the world and the tycoons of the entertainment market,” Wang Zhongjun said.
“We are still discussing it — how to find a better way that suit us, and how to find better platforms that help integrate Chinese culture and world culture. These are all things we are looking for.”
Ren Guoqiang, senior partner of Roland Berger Strategy Consultants, said he appreciates that Huayi has given a lot of thought to international strategy, noting that Wang Zhongjun has spent a lot of time in Hollywood communicating with international talent.
Internationalization is not only about how much of the company’s business, or clients or income come from overseas, he said. The first step for companies to become international is for the owner of the company to be international.
“Hiring some people with an international background doesn’t mean the company is international or is capable of managing international business,” Ren said. “How the entrepreneur thinks about the global market, what his global vision is, and how
It’s an important strategy for Huayi in Hollywood to look for good directors and producers, and use the Chinese market’s capital strengths.”
president of the Huayi Brothers Media Corp
to realize that vision step by step matters a lot. The entrepreneur’s vision, insights and even his location all affect the company’s internationalization.”
Teng Binsheng, a professor with the Cheung Kong Graduate School of Business, a private institution in Beijing, said Bollywood in India makes more movies a year than anyone, but most have no audience outside their home country because there is no effective internationalization.
“But in the past few years, I have seen that some Chinese companies have been able to make first-class movies together with their Hollywood partners, which is a good sign that Chinese companies are able to go global.”
Teng said that if the Chinese movie industry wants to be international, then it is important for Chinese companies to stay in Hollywood and talk to top talent and generate formats with Chinese characteristics as well as being popular with people overseas.
“So we need companies like Huayi to combine the resources and strengths of both China and overseas.”
Wang Zhongjun (left) and Wang Zhonglei at the premiere of the film MrSix in Beijing, 2015.